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California: Fire and Floods

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    Yesterday, a number of US news websites were reporting on a fire at a vast Blue Diamond almond plant in Sacramento on Monday evening, US time. Some of these reports have suggested that this could have an impact on the almond price.

    The extract below is taken from one such report about the incident, from the Sacramento Bee:

    Officials at Blue Diamond Growers were still assessing the damage done to the cooperative’s Sacramento manufacturing facility after a four-alarm blaze there late Monday that sent two workers to a local hospital.

    In a brief statement Tuesday, Blue Diamond said it is investigating what ignited the blaze and is “focused on learning more about the incident and providing support to our employees.”

    No estimates on the extent of the damage or dollar loss were available Tuesday, but “the most likely origin is on the second floor” where different types of equipment are housed, said Sacramento Fire Department Capt. Keith Wade. He noted “significant damage” to the floor as well as smoke damage on both the second and third floors of the five-story structure.

    ...The coming days will likely provide economists a clearer picture on whether the fire will have an effect on the almond industry and the prices paid by consumers. But the industry pegged by UC Davis economists at $21.5 billion is a crucial economic engine employing thousands of workers and accounting for a full quarter of the state’s farm exports.

    Whatever the damage to Blue Diamond’s Sacramento operations, the impact is certain to be felt, said agricultural economist Daniel A. Sumner, director of the University of California Agricultural Issues Center at UC Davis.

    “Blue Diamond is significant in the almond industry. It’s a very recognized name. It’s not only emblematic of the industry, but it’s an important share of the industry. To the extent that almonds were lost, it’s a terrible loss,” Sumner said.

    “In a longer term sense, if machinery was lost, it could take longer (to get back on line),” Sumner added. “These are not raisins or walnuts, so you need specialized stuff. This is not something off the shelf.”

    'Significant damage' from Sacramento Blue Diamond plant fire. Will almond prices skyrocket?

    The suggestion here seems to be that, in addition to large quantities of almonds being consumed by the blaze, potentially, important specialist equipment may have also been damaged in this fire, which may take many months to replace.

    Bear in mind that the Californian almond harvest is set to commence in less than three months. So if crucial machinery has been damaged in the fire, Blue Diamond may not be able to replace it before the commencement of the harvest. That could mean that large volumes Californian almonds will end up locked away in storage for an extended period, leading to a supply squeeze and thus a higher almond price.

    According to a description of the Blue Diamond facility from another website, the plant processes around seven million pounds of almonds per day, which equates to over 2 billion pounds of almonds in a year, assuming that the factory was operational every day. By way of comparison, the 2019 estimate is for an almond crop around the 2.5 billion pound mark. Clearly this is a major operation, and it is not hard to see why there is thus some speculation that this fire could push up the almond price.

    In the announcement of the 2nd of May, Select Harvests stated that their crop was just over 60% committed, so hopefully they will still have some almonds left to sell if the almond price ends up surging in the days ahead.

    This fire isn't the only worry for Californian almond growers. The current weather forecast suggests that there could be significant rainfall over the next seven days across much of California's almond growing region.

    If this forecast proves to be even half accurate, it would be a highly unusual meterological event for this time of year, and could certainly have implications for California's almond industry.

    The worst case scenario would be that heavy rainfall might end up acclerating the melting of the significant Sierra snowpack, and the combination of snowmelt and precipitation could flood low-lying agricultural areas in the valley.

    A more likely scenario is that such heavy precipitation could complicate efforts to manage pests such as the navel orangworm.

    At any cost, the news from California over the next week or so could be interesting.

    Last edited by Inchiquin: Thursday, 02:21
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